(Postponed) DENEL update on SIU investigations, non-tabling of annual report and related matters (with DPE Deputy Minister)

Public Accounts (SCOPA)

06 June 2023
Chairperson: Mr M Hlengwa (IFP)
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Meeting Summary


The Standing Committee on Public Accounts (SCOPA) convened in Parliament to receive a briefing by Denel on the non-tabling of its annual report, liquidity crisis, irregular, fruitless, and wasteful expenditure, as well as outstanding matters. The Committee was also supposed to be briefed by the Special Investigating Unit on its investigations into the entity.

However, the Committee on decided to suspend the meeting due to the absence of the Denel Board.
The Chairperson of the Committee had received correspondence that the Denel Board Chairperson is abroad and would not be able to attend the meeting, but the other Board members would be present in the meeting, but none of the Board members were in the meeting. The Committee said it is a standard procedure that if there are no accounting authorities, the meeting does not proceed

The Committee agreed to reschedule the meeting to 14 June 2023.  If the Board is not present, the Committee will ask the Speaker of the National Assembly to issue subpoenas to the Denel Board on the Committee’s behalf.

Meeting report

Opening remarks

The Chairperson welcomed the members and made some announcements regarding the outstanding work of the Committee. He said the competence of Denel was delegated to the Deputy Minister by the Minister, and correspondence received was that the Board Chairperson is abroad and the other Board members would be present in the meeting, but none of the Board members were in the meeting. He handed over to the Deputy Minister to update the Committee on the whereabouts of the Board members.

Mr Obed Bapela, Deputy Minister of Public Enterprises, said the Denel Board Chairperson is abroad and she could not get any of the other Board members to attend the meeting as some of them are on leave and some are also out of the country. He noted that this was a difficult apology to make to the Committee but he and his team had tried to ensure at least one Board member would be at the meeting but that could not happen.

The Chairperson said this was unacceptable because the accounting authority of Denel is the Board and not the executive. He had received a letter from the Board Chairperson last week saying that she will not be present in the meeting but would ensure that at least one member of the Board would attend.

Mr A Lees (DA) was not sure how to continue with the meeting without the Board because not proceeding with the meeting was also wasteful expenditure and would also delay accountability for the entity. He wanted to understand why the Board Chairperson was unable to attend the meeting and the purpose of her trip overseas and suggested that the Chairperson is not the marketing agent for the entity. What was more important than coming to answer in Parliament? He proposed that the meeting be postponed but not until the end of next week, the meeting must be urgent.

Mr S Somyo (ANC) asked when the Committee communicated the date of the meeting to Denel.

The Chairperson said on the 23rd of May 2023.

Mr Somyo said this was enough time for Denel to arrange for their appearance before the Committee. The Minister could not attend the meeting, but he ensured that the Deputy Minister was present, therefore, the failure of the Denel Board to attend the meeting is unpardonable. In the first instance, the Committee must note the apology of the Board Chairperson, but the fact that she failed to ensure Board representation in the meeting is another matter on its own. The meeting cannot continue without the presence of the Board because the executive team is not the accounting authority of Denel, the board is.

Ms B Van Minnen (DA) said in 2021/22 Denel received a bailout of over R3 billion, in 2022/23, the entity got a bailout of R3.5 billion, and over the last five years they received bailouts of over R9 billion, so there are nine billion reasons why the Board had to be in the meeting, and there was no reason to why they were not. She agreed that the meeting could not continue without the Board.

Ms C Mkhonto (EFF) said the fact that the Board was not in the meeting was probably a reflection of what is going on in the entity, as there is a Board on paper, but not physically, especially considering their reports. She agreed with the view that the meeting could not sit without the presence of any Board member to account to the Committee.

The Chairperson said it is a standard procedure that if there are no accounting authorities, the meeting does not proceed. The Committee had received an assurance that Board representation would be available in the meeting and that did not happen, which is a dereliction of duty and undermining Parliament. The meeting will not proceed and will be reconvened next week on the 14th of June. If the Board is not present, the Chairperson will make a formal proposal to the Committee that the Board must be subpoenaed to appear before Parliament. This is the last instance of the Committee tolerating Denel’s behaviour because the Committee has not had a healthy relationship with the entity and the Board not pitching underscores that unhealthy relationship.

Denel is a shadow of its former glory and as some level of responsibility and accepting the complexity of the matter, the Board would have found it to ensure that they were represented in the meeting. “If this was a meeting about a bailout, they would have been here”. They did not only waste Parliament’s time and resources, but the Special Investigating Unit (SIU) was also in the meeting.

The Chairperson requested the Deputy Minister and CEO of Denel to put it to the Board to explain to SCOPA in writing why the costs of today’s meeting should not be paid by them personally. The meeting will be suspended and reconvened next week on the 14th of June, which is the only day the Committee has before it starts its oversight. He apologised to the SIU delegation as the Committee would not be able to hear its presentation as it would have been best heard after Denel’s presentation.

Deputy Minister Bapela agreed that it is a standard procedure that if the Board is not present, then the meeting cannot continue, and members were correct to say so. The Department is the shareholder and would have answered issues related to them as the shareholder, so the Board as an accounting authority for Denel needed to be in the meeting. He assured the Committee that they will ensure that the Board attends the meeting next week and all future meetings as it is their responsibility.

The Chairperson asked the Committee Support Staff to draft a subpoena that will be submitted in case the Denel Board does not pitch at the meeting next week that the Speaker of the National Assembly will have to issue on the Committee’s behalf. He said it may have been acceptable if they had said they would not be available and asked for a different date, but their saying they were going to attend and then not pitching was disrespectful. He thanked the Deputy Minister, the SIU, the executive team from Denel, and the members for attending the meeting.

The meeting was adjourned.

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